06112001.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
LOUANN WESTERFIELD
TONYA CLARK
DON HOWELL
LYNN ANDERSON
DAVE SCHUNKE
RANDY LOBB
RICK STERLING
GENE FADNESS
WORKING FILE
FROM:
DATE:
JUNE 11, 2001 RE: CASE NO. AVU-E-01-10 (Avista)
AMENDMENT TO SCHEDULE 51—ELECTRIC LINE EXTENSION
TARIFF

On June 5, 2001, Avista corporation dba Avista Corporation dba Avista Utilities—Washington Water Power Division, Idaho (Avista), filed an Application with the Idaho Public Utilities Commission (Commission) for an Order approving proposed revisions to the Company’s Schedule 51 Electric Line Extension.
As reflected in its Application, the Company states that the Commission on May 4, 2001, approved tariff changes to Schedule 51 to reflect updated costs associated with the association of line extensions, as required by the Commission to be filed annually. The newly enacted changes reflect a significant increase in costs experienced during the past year. The effect in the increased costs as they apply to residential developments, the Company states, is substantial. In fact, the Company states, it appears that it will no longer be in a position to compete for service to residential developments when the develop has a choice of service providers. For each development that the Company loses to another service provider, the Company states, it then becomes “locked out” of providing service to adjacent future developments under the (closest to) rules of the Electric Supplier Stabilization Act.
To address this competitive disadvantage, and to have a reasonable opportunity to compete for service to new competitive developments in the future, Avista proposes to collect the non-refundable cash payment, in the present amount of $305 from the builder rather than the developer. The cash requirement would be collected from the time of the service to the home is installed. Whether this amount is collected from the developer or the builder, the Company reasons, the cost ultimately flows through to the home buyer. In order to ensure payment of the home is never built, the amount of the promissary note or credit instrument required from the developer, would be increased by ?305 per lot, from $550 to $855 per lot. Therefore, if the developer provides the ditching for the primary service and an appropriate credit instrument for $855 per lot, a non-refundable cash payment would not be required. However, if Avista provides a ditching within the development, a cash payment of $280 per lot would still be required from the developer, in addition to a credit instrument for $855 per lot.
Under the Company’s present accounting procedure, the non-refundable cash payment that is received from the developer is credited against the cost of the electric plant installed to serve the development. In order for the proposed change to have no effect on other customers’ rates in the future, the Company states, that it will continue to credit electric plant when the primary service is run to the development and, instead of recording the receipt of cash from the developer, it would record an account receivable to be collected from the builder. As previously stated, the promissary note required from the developer would be increased by $305 per lot, in the event that the home(s) is never built.
Avista requests and prays for Commission approval of its proposed tariff revisions on or before July 6, 2001.
Commission Decision
Staff recommends that the Company’s Application be processed pursuant to Modified Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204. Does the Commission agree with Staff’s proposed procedure? If not, what is the Commission’s preference?

vld/M:AVU-E-01-10_sw

DECISION MEMORANDUM 2